4 South American Presidents Sign Agreement Creating New Trade Bloc

Four presidents signed a trade agreement here Saturday that unites the countries along South America’s eastern coast from the steamy Amazon jungle to the frosty south.

The Mercosur trade bloc of Brazil, Argentina, Paraguay and Uruguay will have a population of 200 million people and a combined economic output of $750 billion a year. The agreement takes effect Jan. 1.

“Our predecessors always dreamed of a united America,” said Argentine President Carlos Menem.

The agreement cancels tariffs on 9,000 products traded among the four countries. About 85% of the tariffs will drop to zero on Jan. 1, while telecommunications and other technical products will keep tariffs for the next five to 11 years.

Trade among the four countries reached $12 billion this year, up from $2.7 billion in 1987.

Members of the trade bloc--known as Mercosur in Spanish and Mercosul in Portuguese--also will charge standard tariffs on imports from outside the trade bloc.

Paraguayan President Juan Carlos Wasmosy will be the Mercosur coordinator for the next six months. He said he will try to recruit all of the other South American nations.

Representatives of Chile and Bolivia also attended the proceedings as observers. Chile’s president, Eduardo Frei, has said that negotiations to enter Mercosur are his “No. 1 priority.”